Market Efficiency vs. Behavorial Finance

Market Efficiency

• Market Efficieny says that the market occasionally gets things wrong, but it is 90% efficient.

• Something may be statistically significant but not economically significant, so you cannot profit off the information.

• There are a handful of funds that outperform a broad index of stock, however, there is no way to tell in advance which ones these are going to be.

Behavioral Finance

• Dick Thaler, a behavioralist at the University of Chicago, believes that markets could be 90% inefficient.